Clash over future of energy sector

The UK Energy Secretary has clashed with Scotland's First Minister about the impact independence could have on the crucial energy sector.

Ed Davey claimed a Yes vote in September's referendum would lead to the country investing less in renewables, while the loss of UK subsidies would mean bills for consumers would "rocket".

The Liberal Democrat was speaking ahead of the publication of a new paper on independence from the UK Government, looking at its impact on the energy sector.

But Alex Salmond believes Scotland can become a global "intellectual powerhouse of green energy" with the development of new technology which could help provide power across the world.

The Scottish First Minister will speak out on the issue today when he addresses the Bloomberg Future of Energy Summit during his visit to New York.

He will stress Scotland would have " very different priorities" to the UK Government, adding that an independent administration in Edinburgh would adopt a "long term approach to supporting the energy industry".

The UK Government believes the UK's economic stability and its single regulator for the industry makes it attractive for investors, saying businesses have announced £14 billion of investment in renewables in Scotland, which has the potential to create some 12,000 jobs.

It also argues Scotland gets a disproportionately high share of support for green energy, receiving 28% of subsidies for renewables while the country accounts for 10% of electricity sales.

As a result, Westminster believes the Scottish Government target of generating 100% of electricity demand from renewables by 2020 is more likely to be met if Scotland stays in the UK.

Mr Davey insisted: " Going green will become far more expensive if Scotland goes it alone. The Scottish consumer would see their energy bills rocket if they have to pay for Scottish renewables alone, without contribution from the rest of the UK.

"Right across the energy mix, Scotland benefits from being part of the UK's strong, stable consumer and tax base - supporting thousands of jobs, creating new supply chains and cementing the energy sector as the engine room of the economy.

"The likely result would be an independent Scotland investing less in renewables - which would be bad for jobs, bad for clean energy industries and bad for the world's climate."

But Mr Salmond will use his speech in New York to argue that Scotland is " blessed with many strengths in energy innovation", hailing Aberdeen as "Europe's oil and gas capital" and saying Glasgow has "become pre-eminent in the development of offshore wind technology, for which it is now the leading research centre in Europe".

The First Minister will state: " The energy resources of Scotland are vast and varied - of oil, gas, hydro, offshore wind, wave and tidal power. Per head of population, we are the most energy-rich nation in the European Union.

"The question of how we build on those strengths is an important part of Scotland's constitutional debate. Independence would give responsibility for Scotland's natural resources to the people who are most likely to harness them wisely - the people who live and work in Scotland.

"It would allow us to adopt policies which meet our priorities and specialisms. That would benefit Scotland, and it would also benefit our energy industry."

The UK Government will spend more on supporting nuclear power than it does on green energy sources, Mr Salmond will claim.

"I n October the UK Government signed a contract for the construction of one nuclear power station, with two reactors, in England," he will say.

"The contract involves subsidy payments of up to £1 billion per year for the next 35 years. That's £35 billion to support a mature technology in one power station - by way of comparison, those subsidies are four times the total support, under the renewable obligation, for all of the UK's renewable power in the decade to 2012.

"An independent Scottish Government would choose very different priorities. We would co-operate very closely with the rest of the UK - the European energy market is becoming increasingly integrated. But we would take a long term approach to supporting the energy industry."

While he will say the energy industry across the world is facing " major challenges", the First Minister will add: " For Scotland, these European and global challenges represent opportunity. We have just over 8% of the UK's population; and 1% of the EU's population. But we have 90% of the UK's hydro capacity, 64% of the EU's oil reserves, 25% of the EU's offshore wind and tidal power potential, and 10% of its wave power potential. And we are 100% committed.

"Our energy resources can power much of Europe, our energy innovation can power the world. It's a time for Scotland - working with nations and companies from across the planet - to become the intellectual powerhouse of green energy."

Tom Greatrex, MP for Rutherglen and Hamilton West and Labour's shadow energy minister, said: " The success of the renewable energy sector, employing more than 10,000 people, is underpinned by being a part of the UK single energy market.

"It is beyond dispute that we in Scotland receive around a third of the UK's financial support for renewables, paid for on consumers bills, with less than a tenth of the population.

"This pooling and sharing of support across the whole of the UK benefits consumers and the renewables sector in Scotland, by promoting low carbon generation in the simplest, most straightforward and cost-effective way. It is a positive and practical example of the mutual benefit of being part of the UK energy market that is at risk were we to decide to leave the UK.

"That would inevitably change the energy relationship to a commercially based one, and puts a fruitful co-operative approach in jeopardy. The SNP cannot credibly answer why, having left the UK, consumers in a foreign country would continue to pay to subsidise our renewable energy on their bills - making it more expensive for Scottish consumers, and damaging for Scottish renewables, as a result."

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